The Nevada Supreme Court has ordered financial giant Dean Witter Reynolds and one of its senior vice presidents to pay $10.1 million plus interest for permitting assets of an elderly Lake Tahoe woman's estate to be depleted.
Dean Witter and stockbroker Warren House must reimburse heirs of Elfreda Gardner $4.1 million. Dean Witter must pay $6 million in punitive damages and House must pay $50,000 in punitive damages.
The unanimous high court ruling upholds a Douglas County District Court jury finding against Dean Witter and House for conspiring to convert personal and real property.
Justice Bill Maupin, who wrote the opinion, said the jury's award of $2.6 million in compensatory damages should be increased to $4.1 million. He said the $6 million in punitive damages should stand because there was substantial trial evidence ''that proved misconduct resulting in the substantial depletion of the multimillion-dollar estate of their mentally and physically incompetent client (Elfreda Gardner).''
Assets worth $8 million were transferred from Gardner's account to the control of her nephew, Jack Gardner, a licensed California attorney. Elfreda allegedly signed all of the account documents.
Jack Gardner and Donald Brooks, manager of Dean Witter's Lake Tahoe office, testified they witnessed the signatures. But the court said two handwriting experts testified the signatures were not those of Elfreda Gardner and that three different inks were used in the signing of the papers.
After Elfreda's Gardner's death in 1993 at age 93, Jack Gardner continued to transfer assets from her account to his control. The court said Dean Witter allowed the transfers, despite its policy of freezing accounts when a client dies. House was the executive who serviced the account.
In addition, the court said it is uncontested that Jack Gardner forged signatures to open an account to transfer gold coins to his account. House admitted notarizing the false signatures.
Jack Gardner died before the trial of a lawsuit filed by his aunt's estate, and his estate reached a separate out-of-court settlement.
At trial, Dean Witter and House ''vehemently denied participation in the conversion of securities or a conspiracy to convert securities from Elfreda's accounts,'' the court said.
But Maupin said ''there was clear and convincing evidence in the record to support the jury's finding that Dean Witter and House were liable for maliciously conspiring with Jack Gardner to convert Elfreda's securities.''
Dean Witter and House contend their acts were negligent at best and they were only complying with the requests of Gardner, who had authority to act on behalf of Elfreda.