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A jury has ordered Kirkpatrick & Lockhart and the head of its corporate practice in Miami to pay a former client $1.1 million for failing to protect the client from a financial scam that resulted in millions of dollars in losses. Kirkpatrick & Lockhart and Miami partner Clayton E. Parker were found negligent for failing to do proper investigation and auditing for their client, who was later the victim of a bogus real estate loan investment scheme. A Miami-Dade Circuit Court jury on Jan. 28 found Parker and the 800-lawyer, Pittsburgh-founded firm 50 percent responsible for $2.3 million in losses and interest costs sustained by Bell Holdings Inc., a Miami company that invests in residential mortgages. Bell’s half of the award comes to $1,131,782, according to one of its attorneys, Adam J. Lamb. Attorneys for both sides in Bell Holdings Inc. v. Kirkpatrick & Lockhart LLP and Clay Parker say they plan to file post-trial motions. Bell’s attorneys hope to have the defendants found 100 percent liable. Otherwise, Bell president Barry Hechtman said, “It would be the first time in the state of Florida this was done — where a client could hire a lawyer and then have the client considered negligent.” The defendants hope to overturn the professional negligence verdict entirely. “Although we appreciate that the jury agreed with many of our arguments and reflected that in its verdict, we are disappointed that they felt we were implicated at all,” said Daniel A. Casey, Kirkpatrick’s administrative partner in Miami. “We will continue to defend this matter vigorously in post-trial motions and on appeal.” Bell executive Robert Bell has a separate suit pending against Casey, who worked for him with Parker on matters that had to do with a sunscreen business of Bell’s. Bell alleges that Casey’s advice made Bell’s business, Sea & Ski Corp., vulnerable to allegations that it copied another company’s suntan oil packaging. Robert Bell is former executive of Sun Pharmaceuticals Ltd., founder of the popular Banana Boat tanning oil brand. He sold off that company for $30 million in 1990 and founded Sea & Ski Corp. Bell alleges that Casey gave Sea & Ski the legal go-ahead to market another tanning oil, despite the fact that the packaging allegedly was too similar to other products by South Beach Suncare that Bell had agreed not to infringe upon. It cost hundreds of thousands of dollars to settle the case, according to a Bell executive who asked not to be identified. The settlement was confidential. Both suits were filed in 2000. Parker and Kirkpatrick & Lockhart had high-profile attorneys defending them — former U.S. Attorney Roberto Martinez and well-known litigator Ervin Gonzalez, both partners at Colson Hicks Eidson in Miami. Asked for comment, they deferred to Casey, who said he did not want to litigate the case in the press. Bell was represented by Andrew C. Hall and Adam Lamb, partners at Hall David and Joseph in Miami. According to the suit against Parker, in 1992 Bell Holdings began investing in residential mortgages. Starting in the mid-1990s, the company did that by placing money in the hands of an attorney they knew, Jorge E. Hernandez, who was to lend it out to real estate investors. Bell Holdings would earn interest from these investments. In late March 1996, Hernandez approached Bell Holdings with an opportunity to lend $1 million through him to one of his clients, who needed money to buy properties foreclosed on by the Resolution Trust Corp., the federal agency charged with unloading real estate portfolios of seized savings and loan institutions. According to the suit, Bell Holdings asked Parker to conduct due diligence and make sure the deal was “bulletproof.” However, the suit alleges, Parker failed in that assignment and as a result Bell put the money in Hernandez’s hands and Hernandez embezzled it. It turned out that Hernandez’s client didn’t exist. And the RTC had been dissolved four months earlier. And the insurance that Parker had allegedly said was sufficient to protect the investments turned out not to cover fraud. Hernandez was convicted in 2002 on federal charges of money laundering and fraud, based on allegations that he stole $6 million from clients, the biggest part of which was Bell Holdings’ money. He is serving a 57-month sentence in the federal detention center in Miami, according to his attorney, Miguel Manuel de la O, of de la O & Marko in Miami. The suit also alleges that in early January 1997, six weeks prior to Bell’s discovery of the embezzlement, Bell hired Parker and Kirkpatrick & Lockhart to audit Bell Holdings’ loan files, “to ensure that the files were in order and that the loans were properly documented.” Parker sent a paralegal to review the 30 files. Although she found problems with them, such as missing or incomplete documents, Parker allegedly failed to inform Bell of the problems. Based on Parker’s approval of the files, the court filings say Bell invested another $458,000 with Hernandez. In the other, still pending case in Miami-Dade Circuit Court, Nomo Research Inc., formerly known as Sea & Ski Corp., and Robert Bell v. Kirkpatrick & Lockhart LLP, and Daniel A. Casey, the plaintiffs also are suing for professional negligence. The case came about after South Beach Suncare Inc. alleged in 1998 that Bell’s Sea & Ski was copying the packaging on a South Beach carrot oil tanning lotion. South Beach Suncare sued in U.S. District Court in Miami; a settlement was reached in which Sea & Ski agreed to stop packaging its product in a similar black bottle with black plastic cap with yellow, green and white writing and a graphic on the front showing three carrots. According to the pending suit brought by Bell, Sea & Ski was advised by Casey that it could use similar packaging on other Sea & Ski products. Casey’s advice led to further legal fights with South Beach and cost Sea & Ski and Bell hundreds of thousands of dollars to settle that litigation, a Bell official said. According to court filings, South Beach contended prior to settlement that its damages exceeded $8 million.

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