The opinion of the court was delivered by: SPORKIN
Rather than using the $ 50,000 investment for the purposes designated by the plaintiffs, the defendant Hunt diverted the money for his own purposes. It is clear that the culprit in this saga is Mr. Hunt. Ms. Neeley, the other individual named as a defendant, will be dismissed from the suit because plaintiffs have not been able to meet their burden of proof to show Ms. Neeley's involvement in the scheme that separated the Williams from their $ 50,000. The case was tried before the Court without a jury.
The facts clearly show that Reginald Williams, a gifted young professional basketball player, and his wife, Kathy, were unsophisticated in matters of finance and business. In the late 1980's, upon his graduation from Georgetown University where he had a distinguished career as a star basketball player, Mr. Williams signed a million-dollar-a-year contract with the Los Angeles Clippers, a National Basketball Association team. As a result of this lucrative contract, Mr. Williams and his wife were looking for opportunities to invest part of Mr. Williams substantial earnings.
He was directed to Waymon Hunt, a financial planner, and his company, CWI, Inc., by his wife's parents who had met Mr. Hunt through Clara Neeley who had previously worked in a local bank near Mrs. Williams' parents' home. Ms. Neeley was working for Mr. Hunt by the time the Williams were introduced to him.
The Williams first met Mr. Hunt in June of 1988. At that time, they agreed that Mr. Hunt would provide the Williams with financial and tax advice, including preparation of the Williams' tax returns. At approximately that time, Mr. Hunt brought to the Williams' attention an opportunity for investment involving the purchase of a product styled atmospheric reverse refrigeration heating units (hereinafter referred to as "units").
Because of how these units were supposed to perform, they were represented as being capable of producing an investment return and tax benefits.
The Williams agreed to buy $ 1 million worth of these units through a Hunt affiliated company, Success Through Association ("STA"). In September of 1988, before the Williams decided to make the investment, STA had only $ 301.50 in its bank account. See Plaintiffs' Exhibit #4. The Williams did not know this at the time nor were they aware that STA was a Hunt operated and controlled company. The Williams agreed to purchase the reverse refrigeration units under the following terms:
(b) The deal would be financed by a $ 50,000 down payment from the Williams and a loan to be arranged by STA for $ 950,000.
(c) STA was to serve as "non-exclusive agent for the purpose of leasing" the units.
(d) As agent, STA would "arrange for [the Williams] to receive confirmation of the purchase, financing and leases . . . ." of the units. Plaintiffs' Exhibit 1, para. E.
(e) In the event that the purchase could not be made, STA was to "return [the Williams] deposit in full within one week of [STA's] determination that [the Williams'] criteria cannot be met, but in no event later than December 16, 1988." Plaintiffs' Exhibit 1.
Waymon Hunt agreed to arrange for the $ 950,000 in financing. The Williams signed a purchase agreement and forwarded $ 50,000 to STA, but no money was ever remitted to the purported manufacturer and seller of the units. Immediately upon STA's receipt of the $ 50,000, Hunt appropriated the money for his own use. Hunt did not obtain the $ 950,000 of financing.
Around the time of this transaction, there was an internal battle among the owners of the company that manufactured and sold the units, and the company was placed in receivership. While it later turned out that Mr. Hunt was able to contact a second seller and manufacturer, no purchase of the units ever came to pass. The parties have stipulated that the $ 50,000 sent to ...