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The staff of the Tampa Bay Times

St. Petersburg spending big in Wachovia lawsuit

ST. PETERSBURG -- The legal fight to get back more than $15.8 million in blown Lehman Bros. stock just got more expensive.

After spending about 45 minutes in a closed door attorney-client session on Thursday, City Council members voted unanimously to approve another $200,000 in legal fees. Last year, the city sued its former investment manager, Wachovia Global Securities, claiming it didn't properly inform the city of its share in Lehman Brothers or alert the city when the stock started tanking in 2008. Wachovia responded saying the city was "acutely" aware of the risks.

Judging from the paucity of high-profile prosecutions from the financial crisis, it might be hard to prove Wachovia did anything improper. Still, the Council has approved $610,000 on the legal battle, which is expected to stretch well into next year, and probably beyond.

"Council has to do what it can to get its money back, and that's what we're doing," said Council member Wengay Newton.

There might be a reason why city officials are feeling especially confident to spend more money on the case. According to court papers filed April 15 in U.S. District Court in Tampa, attorneys working for the city on April 12 made a startling discovery that seemed straight out of a Hollywood courtroom drama.

As the city has spent more than a year in the discovery phase, collecting evidence and interviewing people, they were told one key witness, Willis Seabrook, was dead.

Seabrook was crucial to the case because he was the banking official who originally marketed the securities to the city in 2000 and 2001. If anyone could explain what the city was told about how risky the investments were, Seabrook was the man. But dead, he was no good.

So imagine the shock of attorneys taking the deposition of another witness when he mentioned on April 12 that Seabrook had called the other day. Dead men don't make phone calls. Seabrook was alive.

The investments Seabrook marketed and negotiated to the city are "at the heart of the dispute," Matthew Nis Leerberg, an attorney for Smith Moore Leatherwood, wrote for the city in a motion to extend a deadline. The city needed time to find and interview Seabrook, who Nis Leerberg described as "a key witness in the case whom the parties had believed to be deceased."

Chief Assistant City Attorney Mark Winn said Seabrook will be deposed in the next couple of months.

"We won't know how important he is until we depose him," Winn said.

-- Michael Van Sickler, Times Staff Writer

[Last modified: Friday, May 6, 2011 1:18pm]

    

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