Clients sue investor for allegedly mishandling money
News Pointer Editor
Nov. 2, 2004
Two women have accused Marin banker Kit Cole of mishandling their investments, but this may just be the tip of the iceberg: attorneys representing both women say more potential plaintiffs are waiting in the wings.
Leslie Klor, a San Rafael businesswoman, filed suit against Kit Cole Investment Services on Oct. 18 in Marin County Court, accusing Cole of fraud, deceit and negligence. Klor says she lost about $250,000 after investing with KCIS — a sum she had relied upon for her retirement.
“I was really injured by her,” Klor said. “Kit Cole holds herself out as a ‘sister’ — a friend to women.”
Klor invested a $300,000 inheritance with KCIS in 1999. She met with Cole and requested a diversified portfolio, but said Cole encouraged her to invest all of her money in stocks.
In 2000, when the stock market began its decline, Klor began to lose money. According to her lawsuit, she contacted KCIS, but the situation continued. Klor became so distressed that she stopped reading her monthly statements. By the time she gained the courage to look again, she found that she only had $57,000 left.
According to the suit, Klor asked Cole why she had not been contacted. Klor was told she would be informed when her account equity dropped to two years of living expenses, or $48,000.
“We consider this matter to be a private controversy between the corporation and plaintiffs,” said Larkspur attorney Tom Hyde, who represents Cole. “We have not seen the lawsuit and can’t comment on any of the specific allegations that might be there.”
Cole could not be reached for comment.
Martha McMahon, who filed suit against Cole last year, became so close with Cole during her investment with KCIS that Cole served as maid of honor at her second wedding, according to McMahon’s attorney, Bob Gonser.
According to Gonser, McMahon lost more than $2 million in three investment accounts with KCIS, one of which was her pension fund. She initiated arbitration in June 2003, but was unable to meet with Cole.
In August of this year, the American Arbitration Association awarded McMahon $1.2 million in damages, which have not yet been paid — despite the fact that KCIS received a $1 million check from Columbia Casualty Company to help cover it, Gonser said. “This hasn’t been put to bed yet,” he added.
Now, “we are filing a number of writs of attachment; we suspect there may be assets. We believe some of KCIS’ current and former attorneys’ trust accounts may have significant assents. We’re doing everything in our power to bring everything to a close,” he said.
“The McMahon case is a private mater,” Hyde said. “We continue to have discussions and hope to resolve this.”
He suggested that Cole might take legal action if the adverse publicity continues. “Some reputations are being damaged. We don’t want this dealt with in public, and continuing to publicize this is only going to jeopardize the process. This thing may potentially end up with some further actions,” Hyde said.
Klor said that since she filed suit, she has received a number of phone calls from other women who “have told me horror stories about how their financial security was shattered.”
Klor’s attorney, Emeryville-based James Jay Seltzer, said that by the middle of last week he had received five phone calls from others who have alleged claims against Cole. He was in the process of interviewing them at press time.
The news of Klor’s suit has brought more people to Gonser’s doors, too. “I have received calls from six new people who have allegedly suffered losses, from $180,000 to $1.2 million,” he said. “One is a man whose mother is 91 years old and was invested with Cole until June of 2002, and lost upwards of $250,000.”
Cole is the CEO of Epic Bancorp, the holding company for Tamalpais Bank. Gonser said that he is investigating whether Epic Bancorp, a publicly traded company, could be found financially liable for KCIS because the Epic Web site directly refers investment clients to Kit Cole.
Cole has filed suit in San Francisco Superior Court, claiming that McMahon’s suit has damaged her business.
A Mill Valley attorney, Richard Idell, arbitrated his case against Cole and was awarded $352,000. Cole has paid that judgment, as well as some additional court costs, but has appealed the judgment. Like the others Idell accused Cole of mismanaging his investments.
In September Cole announced her intention to resign as CEO of Epic, saying that she wanted to focus her efforts on the bank’s visibility and expansion. Mark Garwood, vice chairman of Tamalpais Bank, was promoted to CEO. The changes take effect Dec. 31.
Garwood would not comment on the situation last week.
This article originally appeared in the San Rafael/Terra Linda News Pointer.