Judge Rules No Intention of Fraud from Former Stanford Broker

After approximately forever, U.S. Bankruptcy Judge James G. Mixon has finally issued a ruling in the only Stanford Group case to go to trial in Arkansas.

You may recall that two investors in “Sir” Allen Stanford’s phony Antiguan bank CDs protested the discharge of those debts in the 2010 bankruptcy of their Stanford adviser, Christopher Collier of Little Rock.

In late 2007, they said, Collier tricked them into investing a total of nearly $400,000 with assurances that the CDs were “safe.” In February 2009, of course, the whole world learned that the CDs were worthless, part of a $7 billion Ponzi scheme.

The case filed by Nancy McGraw and Pfeifer Sutter Family LLC (led by Benton attorney Luther Sutter and his wife, Pamela Pfeifer) went to trial on July 10, 2012. And nearly 14 months later, on Sept. 3, Mixon ruled in Collier’s favor.

The 43-page ruling goes into a lot of detail about net worths (low seven-figures for both parties) and documents signed, not signed, offered into evidence and not offered into evidence.

Ultimately, Mixon decided that Collier — who later surrendered his broker-dealer license — didn’t defraud McGraw or Sutter and Pfeifer because he genuinely believed that the CDs were a relatively safe investment.

“In fact,” Mixon wrote, “it defies logic to conclude that any financial adviser whose reputation and livelihood depend on the success of his clients’ investments would intentionally target his clients for financial ruin.” And intent, he explained, was a necessary part of a finding of fraud.

Because the fees Collier earned on the sale of the CDs to McGraw and Pfeifer Sutter LLC accounted for 1 percent or less of Collier’s $376,692 income in 2008, Mixon said, “the Court is unable to find evidence from which to confidently infer any motive to commit fraud.”

The plaintiff’s attorney, O.C. “Rusty” Sparks, said he was disappointed in the ruling, especially for McGraw, whom he described as an unsophisticated investor. But he couldn’t find fault with Mixon.

“What the judge basically said is ‘tie goes to the runner,’” Sparks said.

The plaintiffs decided not to appeal and, therefore, Collier’s bankruptcy — originally filed in July 2010 — is essentially over. “There may be some small distributions,” his victorious attorney, Frederick “Tripp” Wetzel, said, but all of the legal questions have been settled and all debts discharged.