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The Sleepy Eye Herald Dispatch - Sleepy Eye, MN
  • Judge takes SBM certificate lawsuit under advisement

  • Brown County District Court Judge Robert Docherty took motions under advisement Monday, Aug. 12 during a motion hearing involving the sale of SBM investment certificates.
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  • Brown County District Court Judge Robert Docherty took motions under advisement Monday, Aug. 12 during a motion hearing involving the sale of SBM investment certificates.
     
    The motion hearing involved five cases that allege negligence, breach of fiduciary duty, negligent misrepresentation, fraud and violation of securities regulations, according to Daniel Bellig, an attorney for Farrish Johnson Law Office of Mankato.
     
    On Aug. 12, attorney David Baugh, representing Braulick, requested a stay of proceedings until the SBM bankruptcy case is settled.
     
    SBM Certificate Company filed for Chapter 11 bankruptcy on April 26, 2013, then converted the petition to Chapter 7 on June 17, 2013.
     
    Docherty said he would review the case and issue a decision. As of press time a decision had not yet been handed down.
     
    SBM Certificate Company is one of several companies involved in a Securities and Exchange Commission (SEC) lawsuit filed in 2006. The SEC suit alleges that SBM Certificate Company, SBM Investment Certificates, 1st Atlantic Guaranty Corp., and Geneva Capital Partners, LLC, all owned or controlled by Eric M. Westbury of Silver Spring, Md., did not maintain the minimum reserves in cash or qualified investments to cover the $33 million in face-amount certificates held by over 2,000 investors.
     
    Many of these investments were sold in and around the Sleepy Eye area by financial advisors. Lawsuits have been brought against Laurie A. Braulick and Alan F. Roeser, representatives of Investment & Insurance Services of New Ulm who sold these certificates.
    The lawsuits allege that Braulick and her partners were aware that these certificates were a bad investment, but continued to sell them to clients, according to Bellig, whose firm represents Lester W. Reinarts of Sleepy Eye who filed a lawsuit in Brown County District Court in 2012, seeking $50,000 in damages for SBM certificates sold to him before April, 2006.
     
    All five cases currently under advisement total over $400,000 in damages Bellig noted.
     
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