A federal judge on Tuesday refused to dismiss former Arkansas Razorback Darren McFadden's lawsuit against his former financial adviser's sister and her husband, who live in Little Rock.
In the lawsuit, McFadden alleges that his former adviser, Michael Vick of Little Rock, fraudulently transferred real estate to his sister, Jacqueline Vick, and her husband, Cheo Clark, to hide his assets after McFadden, now a Dallas Cowboys running back, sued Michael Vick in 2016 over the management of McFadden's finances in his younger days. The Michael Vick who was McFadden's adviser isn't the former National Football League quarterback of the same name.
Meanwhile, attorneys for Simmons Bank, which earlier this year was added as a defendant in McFadden's original suit over Vick's alleged theft of $15 million, have asked another federal judge to dismiss it from the case. McFadden's attorneys are opposing the request, saying the bank and its acquisition, Metropolitan National Bank, facilitated the theft by failing "to employ reasonable oversight procedures and observe basic standards of care and fidelity to its customers."
In the case that U.S. District Judge Leon Holmes refused to throw out Tuesday, McFadden contends that on Aug. 15, 2016, just two months after he sued Vick on allegations of fraud, conversion and breach of fiduciary duty, Vick transferred multifamily real property at 1508 and 1512 S. Battery St. to his sister for $289,000 cash and a gift of $211,000 in equity.
McFadden called it "the quintessential example of a fraudulent transfer" and has asked Holmes to prevent Jacqueline Vick and Clark from disposing of it or doing anything to reduce its value.
Attorneys Willard Proctor Jr. and Evelyn Moorehead, both of Little Rock, asked Holmes to dismiss the case, arguing that the allegations are too vague and the suit, which was filed in May, fails to state a proper legal claim for relief.
Holmes' order noted that "although detailed factual allegations are not required, the complaint must set forth 'enough facts to state a claim to relief that is plausible on its face,'" quoting from case law.
"The complaint must contain more than labels, conclusions, or a formulaic recitation of the elements of a cause of action," Holmes said, ruling that lawsuit does indeed contain enough specifics, and cites adequate grounds for relief, to allow it to proceed to the discovery phase.
McFadden wants Holmes to void the transfer on the grounds that it was done with the intent to defraud and violated Arkansas laws, such as one requiring a "reasonably equivalent value" in exchange for property transfers.
In the original case, which now includes Simmons Bank as a defendant alongside Michael Vick and two companies owned or controlled by Vick, attorneys for Simmons filed a motion Aug. 31 to dismiss the bank as a defendant. Simmons bought Metropolitan National Bank out of bankruptcy in 2013.
Attorney Joseph Price II of the Little Rock law firm Quattlebaum, Grooms and Tull argued in the motion that in 2010, McFadden made Vick a signatory on McFadden's account, which "provided Mr. Vick with the authority to engage in the transactions at issue."
"Mr. McFadden also provided a power of attorney to Mr. Vick [in 2008] that expressly authorized Mr. Vick to conduct a wide range of business and financial activities on behalf of Mr. McFadden and McFadden Enterprises, including the transactions at issue," Price wrote.
McFadden formed McFadden Enterprises in January 2008, before he signed a six-year, $60 million contract with the Oakland Raiders in June 2008. McFadden contends that Vick, a longtime family friend, took advantage of the player's naivete in the business arena by inducing the young football player to entrust his finances to Vick, who falsely portrayed himself as a seasoned financial adviser. Vick was, at the time, working as a financial adviser for Ameriprise Financial Services Inc.
Price argued that when McFadden added Vick's name to his bank account at Metropolitan, it required the bank "to accept and pay without further inquiry any item ... drawn against" the account until the bank received written notice of revocation. He noted that McFadden didn't revoke Vick's authority until May 2015.
In a response filed Friday, McFadden's attorneys chastised the bank for seeking immunity "from all claims arising out of its failure to exercise fundamental duties of care to its customers, even when the bank is aware of hyper-irregular and fraudulent transactions resulting in the pervasive theft of customer funds."
The response asks U.S. District Judge James Moody to deny the motion to dismiss. It argued that the bank allowed Vick "to conduct hundreds of unauthorized cash withdrawals and $3,741,000 in unauthorized wire transfers of [McFadden's] funds out of [McFadden's] accounts and into the exclusive custody and control of Vick."
It says the bank "clearly should have flagged $10.9 million in highly suspicious withdrawals and transfers or, at a minimum, someone at Simmons Bank should have contacted ... McFadden directly to inquire as to whether this activity was authorized. Indeed, one simple phone call could have prevented this massive looting and misappropriation."
While the bank argues that it sent monthly bank statements to McFadden, the player's attorneys contend that Vick supplied the bank with an address he controlled and had all the statements go to him.
Over 4½ years, McFadden's attorneys say, Vick made 982 cash withdrawals from the Simmons account "on an almost daily basis," in addition to wiring "millions of dollars" out of the football player's accounts "without detection and without any suspicious activity reports."
The filing alleged that Vick "formed a personal relationship with a Simmons Bank employee(s), who had actual knowledge that certain withdrawals by Vick ... were unauthorized and/or fraudulent."
It noted that when Vick "attempted to structure a similar fraudulent scheme at Signature Bank of Arkansas," that bank "would not accept the generic and vague power of attorney that Simmons Bank embraces."
Metro on 10/11/2017