The Seminole Tribe trusted Wachovia Bank, and later Wells Fargo, to manage a trust fund for its children with their best interests in mind, maximizing the returns on what has grown into more than a billion-dollar investment over the last 20 years.
But the Tribe has only itself to blame for a conservative investment strategy that provided anemic growth, Wells Fargo lawyers argued in court Monday.
Now a jury is being asked to decide whether the children of the Seminole Tribe were defrauded by the bank managing their trust or sold short by their elders’ skittishness about the volatility of the stock market.
Jurors listened to six weeks of testimony in the case, filled with complex legal questions about the bank’s need to balance its commitment to the success of the trust with its responsibility to follow the instructions of their customers.
According to the lawsuit filed by the Tribe nearly a decade ago, there should have been no conflict. The 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 of Tribe members 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.
“They knew the rules,” said plaintiff’s lawyer Steven Osber. “They ignored the rules. They broke the rules.”
According to the Tribe’s attorneys, bank officials shortchanged the trust by picking safe investment strategies, shunning stocks in favor of less volatile but less lucrative money market accounts that didn’t always keep pace with inflation.
In the process, according to Tribe lawyers, the bank illegally paid itself $7,138,320 in unauthorized fees.
The Tribe is hoping to recover up to $800 million in lost potential revenue.
Wachovia managed the trust from 2005 until 2008, when it was acquired by Wells Fargo, which continued managing the trust until the Tribe broke ties in 2016. By then the principal had grown to $1.4 billion. The account is now in the hands of Providence First Trust Company.
Wells Fargo lawyer Tom Melsheimer told jurors on Monday that the Tribe’s own leaders insisted on a conservative investment strategy and should not be allowed to blame the bank for following their instructions.
“Preservation of capital. Preserve principle at the expense of earnings,” Melsheimer said. “If you want to preserve principle, you’re going to pay for it with less return.”
Lawyers for the Tribe rebutted that argument, saying the Trust had “sole investment authority” and should have acted on its expertise even if that conflicted with what Tribe leaders believed.
Deliberations are scheduled to begin Tuesday morning.
Rafael Olmeda can be reached at rolmeda@sunsentinel.com or 954-356-4457. Follow him on Threads.net/@rafael.olmeda.
