August 13, 2008
Former Tennis Star Tracy Austin Accuses Broker Gary Fournier of Fraud
In a lawsuit, she says the L.A. investment broker inflated his commissions and ‘churned’ accounts to generate fees. He denies wrongdoing.
By Kim Christensen
Los Angeles Times Staff Writer
Former tennis champion Tracy Austin on Tuesday joined an all-star cast of sports figures in accusing a prominent Los Angeles investment broker of defrauding them.
In a civil lawsuit filed in Los Angeles County Superior Court, Austin and her husband, Scott Holt, alleged that Gary R. Fournier charged excessive commissions on bond trades and “churned” their accounts to generate fees from unnecessary transactions.
The couple claims damages “in excess of $500,000” on the trades, which allegedly occurred from 1994 to 2002, while Fournier worked for Salomon Smith Barney Inc. in Los Angeles. Its successor firm, Citigroup Global Markets Inc., also is named as a defendant.
Fournier, an investment advisor for more than 30 years, has denied wrongdoing. Citigroup declined to comment.
A member of the International Tennis Hall of Fame, Austin, 45, became the youngest U.S. Open champion in history in 1979 at age 16. She won the title again two years later and was ranked No. 1 in the world before her career was cut short by injuries.
Her allegations mirror those previously made against Fournier by other sports figures, including Los Angeles Lakers great Jerry West and General Manager Mitch Kupchak; former National Basketball Assn. players B.J. Armstrong and Stacey Augmon; and former Major League Baseball players Sean Douglass and Rex Hudler, now a member of the Angels broadcast team.
In a claim filed in 2007 with the Financial Industry Regulatory Authority, the investment industry group that licenses and regulates brokers, West and the others alleged that Fournier charged excessive commissions and churned accounts involving $300 million in trades he executed from 2002 to 2006 while with UBS Financial Services Inc. Sports agent Arn Tellem and his wife, Nancy Tellem, president of CBS Paramount Network Television Entertainment Group, are among those who claimed that Fournier gouged them to the collective tune of $3 million.
Their claim, which focused on Fournier’s actions but did not name him as a party to the case, is set to be heard by a three-member arbitration panel in September. It seeks unspecified damages from UBS, which has denied the allegations.
“Mr. Fournier has done nothing but look out for the financial interests of all of his clients and expects to be fully vindicated in the upcoming FINRA arbitration hearing,” said his lawyer, Michael Blumenfeld.
He called the allegations “unfounded and meritless” and said that “both the timing of Ms. Austin’s lawsuit and its filing in the Los Angeles Superior Court are highly suspect.”
“Any lawyer who commonly practices in this area of the law knows that Ms. Austin is required to pursue her claims before a securities arbitration tribunal — and cannot proceed in state or federal court,” he said. “The court filing therefore suggests nothing more than a litigation tactic.”
Attorney Steven M. Goldberg, who represents Austin and her husband, as well as West and the others, called Blumenfeld’s comments “desperate and preposterous” and contends the lawsuit was properly filed.
Arbitration panels can hear only matters that have occurred within the last six years, he said, whereas the statute of limitations for the court starts when the alleged wrongdoing is discovered.
Austin and her husband learned of the alleged fraud after reading a Los Angeles Times story about the West case in April, according to their lawsuit.