Coleman now facing 11 suits

2 sisters allege fraud

former bar owner says $150,000 debt in arrears

Securities industry

May 15, 1999|By Bill Atkinson and Sean Somerville | Bill Atkinson and Sean Somerville,SUN STAFF

Two sisters have filed a lawsuit against Monica L. Coleman, co-founder of the bankrupt downtown financial advisory firm of Coleman Craten LLC, alleging that she defrauded them of about $200,000 in retirement money.

And a former bar owner, who closed her bar and restaurant to relocate it in the Coleman Craten Financial Club downtown, is suing Coleman, alleging that Coleman reneged on a promise to pay her $150,000, and failed to repay a debt of $39,000.

In both lawsuits, Monica Coleman's husband, Richard A. Coleman Sr., is for the first time named as a co-defendant.

Since January, 11 lawsuits have been filed against Coleman Craten, a 15-month-old firm that was forced into bankruptcy liquidation Thursday.

With their lawsuit, Eileen L. Smith of Timonium and her sister, Agnes M. Henning of Huntersville, N.C., become the fourth set of investors to sue Coleman and the company over fraud allegations.

All together, plaintiffs in the lawsuits say they gave Monica Coleman more than $3 million to invest that was never returned.

Smith and Henning's lawsuit, which was filed in Baltimore County Circuit Court, alleges that Coleman "guaranteed" them a 20 percent return on their retirement money, but never delivered.

"Moreover, she has refused to return the principal investments despite the plaintiffs' requests and having agreed to do so," their complaint says.

Henning, 74, and Smith, 70, met Coleman in 1988 when she was a broker at Legg Mason Wood Walker Inc., the suit says. Henning gave her $100,000 in retirement money to manage and Smith gave her $80,000. Coleman "cultivated a friendship" with Henning and Smith and referred to them on occasion as her "second mothers."

In August 1998, six months after Coleman and John G. Craten started their own investment firm, Coleman offered to "bring in" the sisters on a private investment. Coleman asked them to invest $120,000 each and guaranteed a 20 percent annual return, the complaint says.

The sisters withdrew the money from their individual retirement accounts and each wrote checks of $120,000. Smith wrote an additional check for $13,699, said to have represented the remainder of her life's savings.

But problems surfaced almost immediately when monthly interest checks written to the sisters were returned because of insufficient funds, according to the complaint. The sisters also faced large tax payments after they made the withdrawals from their IRAs. Coleman promised to cover their tax liabilities, the complaint says.

Coleman, who owed Henning $38,211 in interest and tax liability, paid her $34,221, according to the sisters' complaint. She also owed Smith $73,017, in interest and tax liability, and paid her $42,000, the complaint says.

The sisters claim that Coleman and the firm owe them $226,299, including interest and attorneys fees.

In a lawsuit filed Monday, Jeannine Golpira said Coleman agreed in November to pay her $150,000 to close the Gavel, her bar and restaurant on Fayette Street, and transfer her liquor license and the operation to 7 E. Redwood St. Two payments were late and one, for $12,500 due May 1, has not been made.

On Tuesday, Coleman Craten filed for Chapter 11 bankruptcy. On Thursday, a federal bankruptcy judge ordered the company liquidated. Golpira's business in the Coleman Craten Financial Club is now closed, but she said in her suit that the earlier resignation of the company's professional staff "left the bar/restaurant without patrons."

"Now she has no bar and no employment income," said Thomas N. Yeager, Golpira's lawyer.

Golpira also said she lent Monica Coleman $40,000 in April after Coleman said she needed "some cash to get over for a few days," and that only one payment, of $700 by Richard Coleman, has been made.

Golpira said Monica Coleman and Richard Coleman defrauded her by falsely telling her that they had the money and were about to repay her. The lawsuit charges that Monica Coleman falsely told other people that Golpira was bankrupt, was acting irrationally and had threatened to shoot her.

In the lawsuit, Golpira says Coleman directed about half of her $40,000 to Coleman Craten's payroll and the other half to the account of Eileen Smith.

Neither of the Colemans could be reached for comment yesterday.

Pub Date: 5/15/99

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