A Chicago investment firm has demanded prominent big law firm Perkins Coie pay more than $12 million for allegedly helping an advisory firm siphon off millions of dollars through allegedly unauthorized withdrawals as the relationship between the money managers allegedly soured.
On Aug. 16, S-R Investments LLC filed suit in Cook County Circuit Court against Perkins Coie, alleging counts of fraud and breach of fiduciary duty against the law firm.
S-R Investments is represented in the case by attorney Caesar A. Tabet, and others from the firm of Tabet Divito & Rothstein, of Chicago.
The lawsuit represents an expansion of a long-running court fight following the end of the business relationship between S-R Investments and Chicago-based advisor and management firm, Stevard LLC.
SRI and Stevard have been in court against each other since 2021. In that separate action, Stevard claimed SRI owed it millions of dollars in unpaid profit shares and fees it said it earned managing SRI’s investments.
SRI, however, fired back, claiming Stevard had improperly withdrawn $12 million from SRI’s bank accounts in late 2020, allegedly after Stevard began to believe SRI would terminate its contract.
An Illinois state court ordered the $12 million placed in a constructive trust in 2022. Stevard was unable to undo that ruling on appeal, with an appellate court ruling in early 2023 that it lacked jurisdiction under court procedural rules to review the orders.
Now, SRI is asking a Cook County court to also order Perkins Coie to pay up, as the investment firm is accusing the law firm of allegedly aiding Stevard’s allegedly improper withdrawals.
According to the complaint, Stevard retained the Perkins firm, at SRI’s recommendation, to help the parties work through their disagreement over the rightful ownership of the millions of dollars held in special accounts held by SRI, which Stevard believed it was owed.
According to the complaint, the Perkins lawyers “understood and agreed that the funds in SRI’s Reserve Account would be used only to reimburse Stevard for reasonable expenses actually incurred by Stevard on behalf of SRI with SRI’s prior approval.”
However, the complaint asserts the Perkins lawyers later helped Stevard allegedly withdraw millions of dollars from those reserve accounts without SRI’s knowledge or consent.
In the complaint, SRI accused Perkins of allegedly engaging with SRI to allegedly prevent SRI from cutting Stevard off from its accounts and to allegedly prevent SRI from more closely monitoring those accounts.
Further, the complaint accuses the Perkins firm of allegedly drafting documents intended to make it appear that Stevard was acting with SRI’s knowledge in transferring funds from SRI’s accounts to Stevard’s.
And the complaint asserts the Perkins lawyers allegedly provided SRI with allegedly “false and misleading” financial statements and ledgers, allegedly showing the money still remained in SRI’s accounts.
According to the complaint, Perkins never disclosed the transfers to SRI or its counsel, either in later meetings or in writing, nor in a notice of resignation the firm sent to SRI on behalf of Stevard in January 2021.
Further, the complaint asserts Stevard and its attorneys at Perkins Coie allegedly refused to turn over the company’s actual financial records for almost a year following, “unless SRI agreed to provide to Perkins and Stevard a full release of all claims against them.”
According to the complaint, SRI learned of the alleged improper withdrawals in late January 2021.
According to the complaint, Perkins Coie’s legal fees were allegedly paid by Stevard using the allegedly improperly withdrawn funds.
The complaint does not name as defendants any individual lawyers at the Perkins Coie firm.
SRI is asking the court to order Perkins Coie to pay “all damages suffered by SRI,” plus punitive damages and attorneys’ fees.