Jury finds Sovereign wasn't negligent in Bleidt fraud

A federal jury in Boston today ruled Sovereign Bank wasn't negligent for failing to detect confessed swindler Bradford C. Bleidt's use of a business account to defraud investors of millions of dollars.

After deliberating less than two hours this morning, jurors returned a verdict that rejected charges against the bank by four former clients of Bleidt's investment advisory business. The jury found that the plaintiffs' own negligence was the cause of their losses in the $32.6 million Ponzi scheme Bleidt ran between 2000 and 2004.

Jurors sitting at the US District Court in Boston also tossed out a claim that managers at Sovereign's branch at 125 Causeway St. in Boston should have known that third-party checks made out to three of the plaintiffs in the case but given to Bleidt to deposit and invest were being used for purposes the clients had never intended.

The bank's lawyer Patrick T. Voke, attorney in the Boston office of the LeClair Ryan law firm, applauded the decision.

"Sovereign Bank is very pleased with the jury's verdict," Voke said. "The bank has maintained throughout this matter that it had no responsibility for the losses suffered by the victims of Mr. Bleidt's fraud. While Sovereign remains sympathetic to the individuals who were victimized by Mr. Bleidt, it is pleased that the jury agreed that Sovereign acted properly."

David J. Fine, a Boston attorney working on behalf of Bleidt's former clients criticized the verdict and said he would file a motion over the next two weeks seeking a new trial on all claims. He also said he'd ask US District Judge Nancy Gertner, who presided in the case, to enter a judgment in favor of the clients notwithstanding the verdict.

If the judge denies his post-trial motions, Fine said he would file an appeal. "I have great respect for the jury system," he said. "But I think this jury returned a verdict that was contrary to the weight of the evidence."

A point of contention in the trial was the responsibility of Sovereign employees toward protecting parties other than the bank and its customers. The plaintiffs argued that Sovereign should have heeded "red flags" suggesting fraud in Bleidt's business transactions, while the bank maintained that financial institutions don't have an obligation to police their customers' dealing with non-customers.

Bleidt admitted to stealing $32.6 million from 125 clients, using the money to fuel an opulent lifestyle -- from buying Boston Celtics tickets to paying for his sons' private schooling -- and diverting money from newer clients to pay older clients whose funds hadn't been invested.

He was sentenced in 2005 to 11 years in federal prison in Fort Dix, N.J., for mail fraud and money laundering. Much of the fraud was committed through a bank account established for Bleidt's business, Allocation Plus Asset Management Co. The account was opened in 1995 at a Fleet Bank branch that was inherited by Sovereign in 2000.

Today's decision affected only four of Bleidt's former clients who were named plaintiffs in the case: Nancy and Langdon F. Lombard, who lost more than $1.6 million; Donna Brandt Lawrence, who also lost more than $1.6 million; and, Bessie Panos, who lost more than $128,000, according to the complaint they filed in 2006.

The judge earlier denied a motion to certify the case as a class action involving all of Bleidt's victims, but at least 95 other former clients were allowed to intervene, giving them the right to continue pursuing their claims through other trials. While six of the victims sat silently through yesterday's verdict, it remained unclear whether any or all of them would pursue redress through additional trials.
(By Robert Weisman, Globe staff)