The legal fight to get back more than $15.8 million in blown Lehman Brothers stock just got more expensive.
After spending about 45 minutes in a closed-door attorney-client session Thursday, City Council members voted unanimously to approve another $200,000 in legal fees, bringing the total to $610,000.
Last year, the city sued its former investment manager, Wachovia Global Securities, claiming it didn't properly inform the city about its shares in Lehman Brothers or alert the city when the stock started tanking in 2008. Wachovia contends 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.
"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 city officials feel confident enough 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 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 that one key witness, Willis Seabrook, was dead.
Seabrook 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.
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, whom 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.
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A third candidate vies for Polson seat
Monica Abbott, a self-described community activist, has filed to run for Herb Polson's council seat.
Abbott's entrance into the race brings the field of candidates to three. The others are lawyer Charlie Gerdes and former council member Bob Kersteen.
According to her website, mabbottforcouncil.com, Abbott is already proposing a series of initiatives. They include encouraging the development of a movie theater complex at Tyrone Square Mall; improving pedestrian crosswalks; freezing salaries of upper management; relying more on part-time employees to reduce overtime; encouraging city employees to retire sooner; finding services to consolidate with the county, such as libraries, fire, police communications and SWAT teams; and pressuring banks to keep foreclosed properties occupied or to sell them.
Abbott leads the Council of Neighborhood Associations' land development and historic resources committee. Her experience includes being a guardian ad litem and stints as a legal administrative assistant, an enumerator for the U.S. Census, photographer for a series of northern New Jersey papers, special events coordinator for a Montclair, N.J., hospital, and an advertising and marketing services supervisor for American Optical Corp. in Buffalo, N.Y.
Polson, who is not seeking another term, said he expects more people to enter the race.
Times staff writer Michael Van Sickler compiled this report.